It is possible to stop and IVA if you are unhappy with the Arrangement. But you need to be aware of the implications.
Included in this article:
- How to stop your IVA
- What happens to the payments you have already made?
- Implications if you are a home owner
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How to stop your IVA
You can stop your IVA after it has started if you wish. The agreement is legally binding on your creditors and they are not allowed to break it. However you can.
You might want to do this if you believe you picked the wrong debt solution. Alternatively, you may be no longer happy with your IVA company.
Whatever the reason, if you decide to stop your IVA the process is relatively simple.
The first thing you need to do is cancel the payment you are making into the Arrangement. Then, you need to inform your IVA Company. They may try to talk you out of your decision but ultimately they cannot stop you.
It will normally take between 3-6 months for your IVA to fail. You will then receive a letter from your IVA company confirming that the Arrangement has been terminated.
Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.
What happens to the payments you have already made?
When you stop an IVA much of the debt you had at the start is likely to remain outstanding. This is because your IVA company is allowed to deduct their fees and costs from the payments you have already made.
If the payments you have been making each month are only £100/mth or less it is very likely that all of the money will be taken in fees. Your original debt will only have reduced if your payments were much larger.
Given this you will need to put a new plan in place for dealing with your debt. Depending on your circumstances you might consider starting a new IVA. Alternatively if you are not a property owner or have no equity in your home going bankruptcy could be the fastest way to become debt free.
If your IVA fails you are still liable for all your outstanding debt. You must therefore have a plan in place to for dealing with this moving forward.
Stopping your IVA if you are a Home Owner
You may have heard that if you stop paying your IVA and allow it to fail your creditors will make you bankrupt. In fact even if there is considerable equity in your property it is very unlikely they would take this action.
The reason is they would lose control of the collection process and are unlikely to recover what they are owed.
As such if you stop the Arrangement they are much more likely to simply reinstate traditional debt collection activities against you. These could include employing debt collectors or applying for a CCJ.
If one of your creditors is HMRC they are likely to try and make you bankrupt if your IVA fails. Do not allow your Arrangement to fail without getting advice if you owe money to HMRC.
Want advice about stopping your IVA? Call us (0800 077 6180) or complete the form below. It’s free and confidential.
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Hi James,
I’m in IVA for 3 years already (started in January 2018) without any problem, i just had the annual review this week. During this lockdown situation i received 80% of my wage i would say i was losing hundreds of pounds since March. I was able to work for 5 weeks after my company reopened in October. There was plenty of work to do incl overtime as well which put me on for a quiet good salary. But in the last 4 weeks i also started doing a side job where i got weekly salary as well approx £250/week.
So, as my IP have seen my October wage from my full time job plus this extra 3x£250 on my bank statement he increased my monthly contribution from £130 to £434. Really??? Till the end of my agreement which is another 24 month. I told him that i lost hundreds of pounds during the lockdown and always kept on the payments and i’m only able to do this side job until my company can reopen again but nothing happen so my next payment will be £434.
I know he can see those extra income per week but that isn’t guaranteed for every week and if i can go back to my normal work i won’t get this extra earn.
What can i do?
Hi Tommy
Unfortunately your IVA company is required to increase your payment if your surplus income goes up as a result of an increase in your income. As such based on your current overtime and the fact you have started an extra job, you have to expect increased payments.
If you plan to stop your 2nd job and you feel the extra overtime you have been doing will stop in the near future, then you may be able to persuade your IVA company to suspend the increase and review again in say 2 months. However if you are going to continue earning more into the foreseeable future, the increase will remain I am afraid.
I suggest you speak to your IVA company, explain the situation and tell them that your additional income is not guaranteed. They may agree to suspend the increase. If you are unable to agree a way forward with them, the only other option would be to cancel the whole IVA and do something else. However given you have paid for 3 years already I suggest this is an absolute last resort.
If you want to chat your options through, by all means give me a call (0800 077 6180)
Hi I have a question relating my nephew who has signed an iva but now questions his debts listed, he has limited capacity despite being quite bright. is it possible to obtain a detailed report of debts, ie when, what and with whom showing price of original purchase
Hi Trevor
The only way your nephew can get a list of his creditors is by getting a copy of his credit file. He simply needs what is known as a statutory credit file which is free.
The IVA company your nephew is working with would have complied their list of his creditors by accessing his credit file themselves. So it would be a useful exercise to do so you can compare the two.
Can i cancel an iva before creditors meeting?
Hi Diana
Yes, you can cancel your IVA before the creditors meeting (even if you have already signed the paperwork). All you need to do is send your IVA company an e-mail confirming that you no longer want to proceed with the Arrangement and ask them to cancel.
They can’t force you to go ahead, even at this stage.